TRANSACTION SERIES
Franchise Business Intro
Presented by Stephen Lee with CRI
Franchise Business Intro
1)Major components
– Franchise Agreement
– Franchisee qualification
(Franchise fee, Initial Investment, Net Worth Requirement,
Liquidity)
– Interior Construction
– POS systems
– Store Location : Real Estate
– Loyalty fee :
2) Approachable Kinds of Franchise Business
– UPS ( About 5800 stores)
– BBQ ( About 250 stores )
– Paris Baguette ( About 250 stores)
– Tous Les Jours ( About 150 stores)
– (Belle Journee) – Flagship store in Palisades Park, NJ
3) Typical Financial Requirement
- UPS Store
Franchise Fee: $9,950 to $29,950 or $29,950 or $30,000 to $35,000
Initial Investment: $167,825 – $353,580
Net Worth Requirement: $150,000 or $250,000
Liquidity Requirement: $60,000 to $100,000
- BBQ Chicken
Franchise Fee: $40,000 per restaurant
Initial Investment:
$260,000 to $498,000 for an Essential model;
$380,000 to $793,000 for Cafe or Chicken & Beer models
Net Worth Requirement: $700,000
Liquidity Requirement: $250,000
- Paris Baguette
Franchise Fee: $50,000 ($40,000 for second and subsequent cafés)
Initial Investment: $718,065 to $1,801,600
Net Worth Requirement: $1,500,000
Liquidity Requirement: $500,000
- Tous Les Jours
Franchise Fee: $40,000
Initial Investment: $718,230 – $938,894
Net Worth Requirement: $1,000,000
Liquidity Requirement: $400,000
4) Sample Income Model
Typical Korean Brand Café/Bakery
Sales Volume: Mediocre level– $5000/D ($150K/M, $1.8M/Y)
Super level — $10,000/D ( $300K/M, $3.6M/Y)
NOI : Mediocre level – 10 % à $180K/Y ( 5 workers )
Super level – 15% à $500K/Y ( 6 workers)
Remarks: 1. Owner’s salary & Loyalty fee are included in the expenses.
- Location(Real Estate) is the key to be super level.
- POS system is must.
- Franchisor’s training is must.
- Loyalty fee : 5-6% ( Plus some franchisor charges 3%
marketing fee separately for national advertisement)
5) Takeaways
Franchise Business:
- Typical NOI is not high, compared to other small business models.
- Income stream would be stable due to brand power.
- Initial investment is not small relatively.
- Owner absence operation is very possible.
- Real Estate component is critically important to make super level.
- Korean brand Café/Bakery industry is expanding very aggressively in US.
( Pris Baguette’s plan – 1000 stores by 2030)
